UBS Global Wealth Management portfolio manager Angie Newman discussed the market’s response to trade tensions, offering guidance to clients and investors. Citigroup surpassed Wall Street’s expectations for first-quarter profit, thanks to its traders capitalizing on volatile markets that spurred client activity.
The third-largest U.S. lender’s earnings were consistent with those of other Wall Street counterparts, such as JPMorgan Chase, Bank of America, and Morgan Stanley, which also benefited from robust equities trading. Despite the rise in industry profits, executives cautioned that U.S. tariff policies posed a risk to the economic outlook.
In a statement, CEO Jane Fraser noted the bank’s ongoing efforts to assist clients in navigating an uncertain environment. She expressed confidence that, ultimately, long-standing trade imbalances and structural shifts would leave the U.S. as the leading global economy, with the dollar continuing as the reserve currency.
Stock trading increased in the year’s first quarter as investors adjusted their portfolios amid uncertainties related to President Donald Trump’s tariffs and the introduction of Chinese startup DeepSeek’s low-cost AI model. Citi’s market revenue rose 12% to $6 billion, exceeding its prior forecast of a mid-single-digit percentage gain. Equity revenue saw a 23% increase driven by heightened client activity.
Fixed income revenue, a key component of Citi’s market business, climbed 8% to $4.5 billion, primarily due to rates and currencies. Citi’s net income grew 21% to $4.1 billion, or $1.96 per share, for the quarter ending March 31, surpassing Wall Street’s projection of $1.85, based on estimates by LSEG.
Shares of the New York-based institution increased by 1.4% in premarket trading. Year-to-date, shares have decreased by 10.2%.
Concerns over U.S. tariffs have led CEOs across Wall Street to warn of potential economic repercussions, sparking recession fears. Bank stocks dropped substantially following the announcement of broad U.S. tariffs, a reversal from earlier optimism toward Trump’s pro-business stance. Tariffs might trigger inflation and impede economic growth, potentially reducing companies’ interest in deal-making and borrowing. Diminished consumer confidence could also impact spending and loan demand.
Mark Mason, Chief Financial Officer, noted the significant uncertainty surrounding tariffs and trade policy, as well as the broader agenda, deregulation, and tax policy, which could place downward pressure on growth forecasts.
During the quarter, Citi’s cost of credit was $2.72 billion, up from $2.37 billion a year earlier. Two divisions that CEO Fraser recently revamped showed improvement. Banking, under the leadership of former JPMorgan Chase executive Viswas Raghavan, saw a 12% revenue increase to $2 billion. Citi’s investment banking fees rose 14% to $1.1 billion, with notable contributions from advisory services on deals, including Johnson & Johnson’s $14.6-billion acquisition of neurological drug maker Intra-Cellular Therapies.
In the wealth management unit, headed by former Bank of America executive Andy Sieg, revenue climbed 24% to a record $2.1 billion. Under CEO Fraser’s multi-year initiative, Citi aims to streamline operations and enhance returns while addressing long-standing regulatory issues. While much of the restructuring was completed last year, the bank is continuing to improve data quality management and regulatory reporting. Bonuses for top executives in 2024 were reduced due to insufficient progress on compliance matters.
Citi plans to reduce reliance on information technology contractors and hire thousands for IT roles in response to regulatory penalties, as reported by Reuters. In the first quarter, the bank repurchased $1.75 billion of shares, exceeding previous expectations of $1.5 billion, with similar levels of share repurchases targeted for the second quarter.
